Trading Plan for 11/13

[pay]Pattern notes.
Thursday’s sellers went to great lengths to let in buyers. Wednesday’s failed probe of prior highs had introduced a vulnerability to an overnight drop. But overnight probes under Wednesday’s lows were recovered. The same pattern had opened the door to a severe sell-off at the open. But Thursday’s open was down only slightly.

And the open’s selling pressure was notably weak, practically begging buyers to pounce. They did, with a 9-point surge. But that was the session’s first half-hour. The open’s entire surge was retraced by late-morning. Lower and lower lows throughout the day hesitated to extend, and sometimes bounced. But the bounces all failed, and the decline extended each time.

It finally took a last-minute dive – an inappropriately time, second-to-last minute dive – before buyers finally bothered to push back. The dive was probing 2-1/2 points under Tuesday’s 1085.00 low. Buyers had to push back there, because closing under it could have gapped down Friday to 1075.00.

Actually, the cash session closed more at 1085.00 than above it. So, there’s no greater likelihood of rallying Friday, not even firming. Overnight noise has room up to 1090.50 before considering whether sellers may have decided to wait until the afternoon, or next week. But they gave buyers almost every opportunity Thursday. The last-minute save from closing under Tuesday’s low requires buyers to exploit it, or else sellers will.

Indicators and Internals.
Several intraday positive divergences were ignored Tuesday, or only temporarily productive. Yet more help given to buyers that they didn’t exploit. Simultaneously oversold RSIs at the low occurred during the last half-hour, which is too late to require the low’s retest, but it still undermines the credibility of buying that followed.

Friday’s opportunities.
This being a Friday, the morning’s bias is likely to persist through the noon hour. The day’s highest-profile econ report comes after the open, so initial trending might not be in the ultimate direction. Early strength that reverses down could trend down through the morning. Recovering an early dip could trend up, perhaps more effectively since buyers didn’t extend themselves Thursday. [/pay]